copyright © 2006 by john wiley & sons, inc. all rights reserved


Retailing in the 21st Century


Ch. 1: The Basics of Retailing

• Explore the dynamic nature of retail• Get started in the retail business• Assess your “retail readiness”• Focus in on your dream so you can turn

it into reality• Discover the values that will guide your

business• Develop an effective signature line• Develop strategies to guide your retail

decisions


Six Basic Steps

• Plan your business• Validate your ideas• Get the financing• Orchestrate your grand opening• Create your routine• Grow your business


Retail’s Lifestyle Impact PROS CONS• Not much travel;

can stay close to home

• Variable work hours• Multiple networking

opportunities• Income potential• Being your own boss• Creativity and

excitement

• Temptation to be at store all the time

• Long work hours; working weekends

• Hard to find employees you trust

• Lots of responsibility• Tedious when sales

are slow


“The 8-Point Retail Filter”

• Product – What do you sell?

• Presentation – How is it displayed? What does your store look like?

• Procedures – How do you run the business, day to day?

• Pricing – What kinds of prices do you charge?

• Promotion – How do you advertise and market?

• Profitability – Are you able to make money?

• People – Who are your employees?

• Brand – How do your distinguish your store from others?


An Effective Signature Line…

• Is made up of less than eight words.• Can be placed after your logo every time

your logo appears.• Is memorable or can be repeated often

enough that it gets remembered.• Communicates who you are, what you

do, and what customers can expect from you.


Ch. 2: Branding Your Business

• Recognize the importance of branding• Take steps to build brand power• Maximize your brand potential• Define various types of customers• Identify your customers and learn the

importance of knowing them• Determine what motivates customers to

buy


Naming Your Retail Business• Memorable• Image-driven• Short• Easy to spell• Easy to pronounce• Not generic• Clever but clear• Research others’

possible use of your selections

• Nothing negative or offensive (in any language)

• Think “staying power”

• URL availability for Web site

• Register name with state and U.S. Patent/Trademark Office


Creating a Business Logo

• Keep it simple, easy to recognize• Select font size/style carefully• Seek out and study other logos you like• Hire a graphic designer to create 2 or 3

options• Ask a variety of opinions about the

prospective designs• Select colors adaptable to other types of

trade dressing


Becoming a Retail “Expert”• Continue your research, about your

specific product lines and your industry in general.

• Make it a point to know more than your peers. Take additional classes.

• Obtain credentials, such as professional certification in your field.

• Make yourself available for comments, features to the local news media.

• Hone your public speaking skills. Give seminars, presentations to civic groups.


Top 10 Reasons Customers are Lost

• Salesperson on phone

• Store inconvenient• Store dirty or

smelled bad• Store didn’t have

what customer wanted

• Salesperson lacked product knowledge

• Waiting lines too long

• Didn’t have advertised goods in stock

• Felt “ignored”• Salespeople

“pushy”• No one at cash

wrap when ready to pay


Ch.3: Retail Location and Design

• Studying location options and related issues

• Negotiating a lease agreement• Understanding lease terminology• Using space to maximize sales and

customer contact• Choosing store fixtures• Working with landlords and government

inspectors


Location, Location, Location!PROS CONS

Main StreetGood for convenience

and specialty businesses

Great foot trafficGood loans available in

historic buildings

Just off Main StreetBetter parkingLower rents

Parking difficult, can be expensive

Some signage restrictions

Less visibilityLess foot traffic



NeighborhoodsGood for convenience

and specialty businesses

Good parking availabilityPeak business at earlier

hours than mall sites

RoadsideFreestanding siteAmple parking

Clientele limited to the particular area

Limited hours may limit profit potential

Requires aggressive ad and marketing plans

“Urban sprawl” restrictions



Strip MallsGood for convenience and

service-type businessesGood parking availabilityWelcomes small and

independent businesses

Community CentersLarge anchor stores

attract foot trafficAmple parking

Location may not be best for your target customers

Leases, rules can be very restrictive

Leases, rules also very restrictive



Regional MallsDraw customers from a

large geographic areaGood parking availabilityCan start small (kiosk)

Specialty CentersSuccess depends on how

well the center draws customers

Ample parking

Most expensive start-upCheck out reputation of

mall firstRestrictive rules, leases

Your store concept must “fit” the specialty image of the center



Neotraditional Community Centers

Planned shopping areas with distinctly old-fashioned or artsy design

Could live upstairs from store

May have limited parking (customers encouraged to walk)

Most customers from very localized area

Restrictive rules, leases (especially about signage, décor)


Your Landlord Will Want…• A complete business plan• Space requirements & your plans for space• Photos: of merchandise, similar stores or

concepts, and a headshot of you• Financial statements• Funding commitments• Information about industry trends• Anything to enhance your image as a

professional and a good prospective tenant


Negotiating a Retail Lease• Base rent• Percentage rent• Is lease “triple

net?”• CAM charges• Property taxes• Security charges

(part of CAM fees or not?)

• Insurance fees & requirements

• Promotional costs• Merchant dues (in

mall locations)• Miscellaneous

expenses and/or professional services (exactly what are they?)


Interior Design Considerations• What will the lease allow (or not)?• Location of cash wrap area• Location of markdowns, sale racks• Create pathways with contrasting floor

colors or textures• Avoid straight lines• Position displays to prompt customers

to “stray from the path”• Visual depth of display fixtures


Ch. 4: Business Planningand Structure

• Present your business in the best possible light• Put financial requirements and projections in

writing• Define your management style• Determine the business structure and type of

corporation yours will be• Recruit a board of directors• Research permit and license requirements in

your field• Identify local, state, and federal tax

regulations and responsibilities


Business Plan Components

• The Preview - Cover page, contact info, executive summary

• The Business Description - Introduction, industry, competition

• The Marketing Plan - Positioning statement, how product will be sold, types of marketing and advertising planned


Business Plan Components(continued)

• The Financial Plan – Cash flow projection, profit/loss statement, risk analysis

• The Management Plan – Your background and experience, key employees, consultants and financial advisers, board of directors, family commitment, overall management style

• The Summary – Key points from each of the other sections, reinforcing the strength of the plan


Business Structures: Sole Proprietorship

PROS CONS• Don’t have to share profits

• Maximum flexibility; make all your own decisions

• Minimal paperwork to get started in business

• Insurance can cover some risks

• Easy to close if you decide not to remain in business

• Personal financial & legal liability

• Liens may be taken on your personal property by creditors

• Difficulty getting traditional financing

• All business income is taxed as your personal income

• Sole responsibility for success of the business


Business Structures: PartnershipPROS CONS

• Shared financial & management responsibility

• Easy to form• Expertise of more

than one person• Moral support from

partners• Insurance can cover

some personal risks

• Possible conflict among/between partners

• Unequal financial risk between partners

• Difficulty in obtaining traditional financing

• Difficulties when one partner wants to sell or close business & others do not


Business Structures: CorporationPROS CONS

• Corporation (not individuals) has legal & financial responsibility

• Separates personal assets of owners from their business

• Transfer of ownership is relatively easy

• Requires more paperwork and legal advice: annual reports, quarterly tax statements

• Higher taxes and potential “double taxation” (unless you are an S corp)


Ch. 5: Creating Internal Systems

• Merchandise functions• Operational functions• Marketing and promotional functions• Safety and security functions• Basic personnel functions


Creating Procedures For…

Merchandise Functions• Buying• Receiving• Pricing and ticketing• Placing merchandise on sales floor• Processing special orders• Reordering• Restocking• Making markdown decisions


Creating Procedures For…Operational Functions• Opening and closing the store• Accounting for cash• Dealing with the alarm• Processing sales• Accepting credit cards and checks• Processing merchandise returns• Taking cash readings• Analyzing inventory and sales• Managing fixtures and supplies



Marketing Functions• Presenting the merchandise• Planning a marketing calendar• Creating a selling system



Safety and Security Functions• Preventing shoplifting• Preventing employee theft• Preventing administrative and paperwork

errors• Putting rules and policies in writing• Checking rules and policies with an attorney



Personnel Functions• Basic employment policies (scheduling,

breaks, vacations, sick leave, flextime, etc.)• Employee benefits• Putting rules and policies in writing• Checking rules and policies with an attorney• Posting rules and policies as reminders• Discussing and updating with staff input as

needed


Ch. 6: Buying and Displaying Merchandise

• Determining the right merchandise for your store

• Locating sources for the merchandise• Attending markets and trade shows• Working with importers, sales reps and buying

offices• Ordering the merchandise• Pricing the merchandise• Using themes and props to create displays• Borrowing display ideas from the pros


Sources of Merchandise

• Buying direct from manufacturers

• Direct salesperson• Manufacturer’s rep• Sub-rep• “Repping” firm• Wholesale

distributor

• Importer• Jobber• Buying group• Buying service or

buying office• Consignment

agreement


Buying Strategies

• Never buy without a plan and a budget!• Use the first day of a market or trade

show to look around before making decisions

• Go in with knowledge of the marketplace, customers and competitors’ prices

• Don’t act like a “big shot,” even when you’re making a big buy

• Don’t act too humble, either..!• Ask for deals and add-on services


Deals Worth Asking For at Market

• Off-price merchandise• Promotional goods• Invoice dating• Better shipping terms• Trunk shows, demo days• Advertising money• Photos of merchandise Can you think of others?


When Pricing Merchandise, Consider…

• The competition in your market• The perceived value of the item or line• The value inherent in the brand• The merchandise category• The type of store• The overall look of the merchandise• What employees think of the merchandise• The true market value of the item or line


The “Open to Thrive” System

The 40-55-5 Rule• A maximum 40% of money made on sales will

go toward expenses associated with the sales.

• 55% of money made on sales will go toward buying new merchandise.

• 5% of money made on sales is positive cash flow (in reality, a type of profit)


Ch. 7: Hiring, Managing and Legal Responsibilities

• Understanding the employer mind-set• Finding qualified people• Polishing interview techniques• Conducting exit interviews• Shopping for insurance• Hiring attorneys and accountants• Managing store security


Where To Find Employees

• Your employees’ recommendations

• Your customers’ referrals

• Networking in the community

• Internet job postings

• Job fairs• Cause marketing

(for charities, “good causes”)

• Government job services

• Your competitors (yes, it’s okay to “steal” people..!)


Look for Employees With…• Good attitude• Sales skills• People skills• Common sense• Communication skills• High motivation level• Product knowledge• “Promotability” What would YOU• Leadership skills add to this list?


Retaining Good Employees• Brainstorm; ask their

opinions• See training as a

dynamic, ongoing process

• Have some fun on the job

• Treat employees as individuals

• Establish healthy boundaries: not too “chummy” or overly personal

• Create task lists to acquaint workers with your expectations

• Mentor, coach, advise your staff as needed

• Avoid petty rules• Praise good work, in

person and in writing• Reward creatively

(not “cash bonuses”)• Learn from truthful

exit interviews


Which Types of Insurance Will Your Store Need?

• Automobile• Boiler and machinery• Electronic data processing• Employment practices• Liability (business owner’s policy, BOP)• Umbrella (excess liability)• Worker’s compensation (usually

required by states)


Ch. 8: Advertising

• Why you have to WOW your customers• The basics of advertising• How to choose the advertising

medium(s) you will use• Inexpensive ways to advertise on a tight

budget• How to create a successful promotion• How to build fun into a promotion• The value of a promotion checklist


Turning Negatives into Positives• Whoever gets the complaint “owns” it until

it is resolved.• Never fight with a customer; hear them out• Address the problem immediately.• Let your “make-up offer” be a WOW!• Recognize the lifetime value of the

customer.• Turn the WOW into WOMA – Great word-of-

mouth advertising.


Retail Advertising Content

1) The name of the store2) A brief slogan or signature line3) A positioning statement that explains

what the store is all about4) Contact information (address, phone,

Web address, etc.)5) Dates of the event (if advertising a

particular sale or promotion)


The Rules of “Pulling Power”

• The more specific the ad, the better it will pull.• Features tell, but benefits sell.• If the merchandise is “better” (higher-end), the

ad must be “better” (classier, more sophisticated).

• Beautiful, award-winning ads don’t always pull. Just because it’s pretty, cute, or clever does not mean it actually prompts people to visit the store and/or buy.

• Don’t change the ad style or concept just because you are tired of it; the customers may not be. It takes time to build up recognition.


Newspaper Placement Options

In big-city dailies Regional or zone

editions Special sections Weekly sections Multiple, “rate

saver” ads

In other publications Weekly suburban

or small-town papers Regional

newspaper groups Shoppers Magazines


Types of PromotionsCompetitiveThe “bests”In search of the (store

name) woman/manRunning/walking

eventsBed races“Ugliest gift”Art shows (for kids or

adults)

Non-competitiveBook signingsLunch at or “on” the

storeHosting seminarsUsing store as meeting

place for groups, clubs

Charity nightsCelebrity appearancesThemed costume daysOpen house/trunk

show/demo day


Ch. 9: Making the Sales

• Determine a strategy for each sales event

• Conduct a successful, well-planned sale• Consider the services of professional

sale planners• Hone the sales skills of your staff

members• Work with difficult customers


What Makes a Great Sale?

• Promotable items, in sufficient quantity to justify the event

• A specific purpose• Timing – not one after the other• A strong customer mailing list• A pre-sale shutdown period, if possible• Careful planning• Sales promotions and giveaways during

the event


Name That Sale!• Why are you having it?• Who is the target customer?• When are you having it?• What’s going to be on sale?• Is the name appropriate to the

merchandise?• What type of impact do you want?• What is the sense of urgency?• What are you offering?• Where will it be? (Fairgrounds, sidewalk, tent, etc.)


A Good Salesperson…• Never ignores a customer.• Greets the customer by name whenever

possible.• Looks professional and appropriate for the store.• Understands the importance of service.• Is friendly and willing to listen.• Can suggest another item if necessary.• Looks at each customer as having the potential

tp\o purchase multiple items.• Always thanks the customer.• Always follows up to make sure the customer is

satisfied.


Each Sale is a 5-Step Process…

1) Greeting the customer2) Creating a bond by asking questions,

appearing interested and listening to them

3) Making suggestions based on what you hear from them

4) Handling objections with adjustments and suggestions (and tact!)

5) Closing the sale and/or prompting an add-on sale


Ch. 10: Money Matters• Determining what to pay yourself, and

employees• Choosing a payroll service• Accepting different types of payment• Fighting credit card fraud• Finding a computer system• Working with an accountant• Establishing routines to supply data for

financial reports• Using the financial reports to help you

understand your business


Ask Credit Card Processors…

• What is your base rate? (A percentage)• Is there a monthly charge or “statement

fee?”• How much are the transaction fees?• Are there additional charges for: debit card transactions? corporate card transactions? foreign cards?


Fighting Credit Card Fraud• Shred all receipts and invoices before

discarding.• Use an Address Verification System (AVS) or

call banks to verify (at least some) addresses, phone numbers.

• On phone orders, ask for security code numbers printed directly on cards; or ask for a fax of both sides of the card.

• Verify every order with different bill-to and ship-to addresses.

• Keep files of unusual or fraudulent activity, in your store or in your area.


Determining the Value of a Computer System

• Will I do more business because of it?• Will I save money because of it?• How long will it take to justify the cost?• Will reports, invoices be more accurate?• Will it enable better service for my

customers?• Will I save time because of it?• Do I want to track merchandise, money or both?


The Profit and Loss Statement1) Net sales: How much money is coming in?2) Cost of goods sold: What the merchandise

you’re selling actually cost you to obtain.**3) Gross profit: 1) minus 2)4) Total operating expenses: How much is it

costing to run the business?5) Net income (or loss): 3) minus 4) = Did you

make (or lose) money during this period?

** A simple formula for calculating cost of goods sold is on page 243 of the book.


Ch. 11: Retailing for the Global Marketplace

• Web site design and maintenance• Selling over the Internet• Advertising the Web site• Selling internationally• Importing merchandise


Necessities for a Good Web Site• Careful organization• Good navigation• Ease of online ordering • Photos – Good quality; not too many• Similar look and feel as your store• Security of customers’ personal

information• Appropriate domain name• Competent Webmaster and Web host


Optional Web Site Features

• Video clips• Shopping cart• Testimonials• Online catalogs• Affiliate programs• Advertising

• “New products” section

• Printable coupons• Bulletin boards• Book reviews• Links


Sources of Imported Merchandise

• Importers – U.S.-based distributors• Resident sales agent – U.S.-based rep

for multiple foreign manufacturers• Buying offices – U.S. or foreign-based• Commissionaire – Foreign-based office

to help U.S. merchants do business in that country

-----------• Customs house – Does not sell goods; is

hired to get them through U.S. Customs


Challenges of International Buying

• Added costs – shipping, taxes, insurance• More stringent payment terms, including

payment in full up front• Guaranteed minimum orders often

required• Limited possibilities for prompt reorders• Longer lead time due to distance, transit• Size differences for some goods may

require specifications• Delivery delays – weather, strikes,

Customs delays

copyright © 2006 by john wiley & sons, inc. all rights reserved

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